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CA Foundation · Accounting · Partnership and LLP Accounts

Mehta and Nair share profits in the ratio 3:2. Their capitals are ₹3,00,000 and ₹2,00,000. They admit Oberoi for a 1/5th share. He brings ₹1,00,000 as capital and ₹50,000 as premium for goodwill. Mehta and Nair, who sacrifice in the ratio 1:1, take no goodwill adjustment other than this premium. What amount is credited to Mehta's capital account for goodwill?

Mehta's capital account is credited with ₹25,000. The ₹50,000 premium for goodwill is distributed among the sacrificing partners in their sacrificing ratio of 1:1, not in the old profit ratio.

  1. A₹25,000Correct
  2. B₹30,000
  3. C₹20,000
  4. D₹50,000

Explanation

The premium brought in by the new partner is shared by the old partners in their sacrificing ratio, which is 1:1 here. Mehta gets 50,000 x 1/2 = ₹25,000. Using the old ratio 3:2 would give ₹30,000, which is the key mistake.

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